SWOT Analysis for Marks & Spencer.

Appendix A shows the financial performance of Marks & Spencer from the years 1997-2002 (year ending March), it can be seen that the company’s turnover (annual sales) had been in gradual decline since the year 1998 where turnover was at £8,243 (m) until 2001 where turnover was at a low £8,075 (m), however sales increased to £8,135 (m) in the year 2002 which show good signs overall for the company

Weaknesses

One of the main weaknesses that the company suffers from is the ‘old fashioned’ image which is also a strength described earlier. The public consider Marks & Spencer as being behind the times in terms of their product range and the image and brand name is not appealing to the younger target audiences. The entire image of Marks & Spencer has become dull and are no longer viewed by the younger generations as a retail store that provides latest clothing material. It is a weakness that they do not have a broad knowledge about the market for this younger generation which is essential. The company offers a variety of clothes which are aimed at all segments and from this it is evident that there is no specific target audience that Marks & Spencer aims at. This can be clearly seen within the stores as each segment does not have its own department. This is a weakness due to the fact that people like individuality whilst they are shopping, for instance a teenager would not want to walk through the clothes range for 60+ elderly people just to get to the teen area. Hence stores need to be more segregated. The key weakness is Marks & Spencer’s clothing department (see Appendix D) The statistics show that sales of clothing have been in constant decrease since 1998 where annual sales stood at 4309, however in the year 2001 annual sales stand at a low amount of 3731. Performance in this area has been lacking for several years.

Promotion is another weak factor. The company has always used ‘word of mouth’ advertising to promote their products which was effective in the past decades, however rivals such as Gap have intense advertising campaigns which are effective in persuading the public. A weak factor which gives the company less competitive advantage is the fact that they are restricted to their own brand label in all of their departments, whereas other supermarkets sell products not only from their own brand but other well known promoted brands which gives them competitive advantage.

Oppurtunities

It is essential for Marks & Spencer to take advantage of all the opportunities that they encounter. A key opportunity is to restructure the company in terms of focusing on individual segments and commence to use appropriate marketing strategies to target these individual segments. Marks & Spencer recently took the opportunity to use one of the most recognised sports stars in the world, David Beckham, who opened his clothing line aimed at younger children. Of course this was a great move made by the company. Another key opportunity is that Marks & Spencer has the power over suppliers. Of course, the industry is very big and if a supplier does not offer them what they want and need, Marks & Spencer can turn to another supplier.

Threats

The competitive nature of the market that Marks & Spencer functions in is a big threat. Competition is intense from other retailers such as Top Shop, Gap and Next. These retailers offer more of the fashionable and trendier designs in clothing which appeal to the younger audience, whereas intense competition from Next, Debenhams and BhS offer better value for cloths targeting teenagers and middle aged men. So key information like this shows that the market for clothing is clearly segmented by age and is very evolving  and therefore Marks & Spencer would have to keep up with the latest fashions and styles in order to compete with these top retailers. The clothing industry itself apposes a few threats, this being that the clothing industry is mature and the market is not saturated, therefore people always need new clothes and due to this new clothing stores are always opening which means more competition for Marks & Spencer. Although Marks & Spencer’s performance in the food sector is a strength, food chains such as Tesco and Sainsburys have accelerated their competition by taking advantage of internet technology which enables consumers to shop from home through the internet and hence food shopping in conveniently delivered to home. Another threat to the company is the stock market, the company should closely watch their share price, if the share price falls too low, then people would be reluctant and nervous about investing substantial amounts of money into the shares of the company. After all, Marks & Spencer do not want to be another victim of a ‘take over’, even becoming the subject of one would give out a bad message to the public that the company is doing bad business.

Conclusion and Recommendation

It is clear from the analysis that Marks & Spencer require a great deal of reorganising in various departments. The company needs to find a way that will boost their market share and hence one again be the best retailers. A big drawback is that the public consider Marks & Spencer to be ‘old fashioned’, due to this, it is vital that the image of the company is brought in line with the 21st century in order to win back the customers that were lost to the likes of Next, Gap and Topshop. The company’s main objective is to be at the forefront of fashion, to do this it is also for Marks & Spencer to target specific markets in the clothing industry so that people feel that the store is designed specifically to meet their needs. Certain measures need to be initiated to boost sales and new styles and products need to be introduced. As a business it would be necessary to create a plan that will satisfy all segments in the fashion market, a way of doing so would be to identify the key factors which influence people of various ages when they are buying clothes. A problem is that people shop at places which target specific age groups, for instance under people under 40 shop at Next because their product range is more fashionable and is targeted at specific age groups Marks & Spencer need to strive ahead, and anticipate what is going to be fashionable in six months to one years time. Certain measures need to be initiated to boost sales and new styles and products need to be introduced, this can be done by carrying out intense market research which will identify what styles/products the public wants and needs. Rather than following other stores, they need to re-establish themselves as an organisation that shows innovation and hence create the fashion of the future. Maybe researching on how the consumer’s shopping experience can be enhanced, improve lighting, adding trendy music in the teenager’s area, changing the layout of the store to separate the various segments, overall making the store more attractive and aesthetically pleasing, all these concepts will attract new customers and improve customer satisfaction. Overall, the store colour scheme is unattractive and unappealing to the younger target audiences as is the lettering of the St.Michael brand, the company should attempt a more appealing and radical approach fitting for the new century. Due to the nature of the market, Marks & Spencer need to decide weather they want to target a specific market, which would be beneficial, or a wider target audience, which will not be so rewarding. Marks & Spencer also require investment is advertising and e-commerce. They need to adopt an effective advertising strategy which enables them to compete and out perform retailers such as Gap and Next. Launching online shopping will increase market share as it offers the consumer an alternative way to purchase goods. Another aspect which can be looked into is that Marks & Spencer is one of the few retailers which does not offer the ‘points’ or ‘reward’ system, from this customer loyalty can be increased because more and more people would want to earn points or rewards, hence this would increase sales.

 

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